Investor demand and spot commodity prices: Reply

In a recent article (Tilton et al., 2011), we argue that even when investor stocks are declining an increase in investor demand can cause a commodity's price to rise, a conclusion that is both contrary to conventional wisdom and counter-intuitive. In his comment on our article, Olle Östensson (2011) challenges this finding. After assessing his concerns in this reply, we maintain that our original finding is valid: investor demand can be driving commodity prices higher even when investor stocks are falling.     

Comment: Investor demand and spot commodity prices

Tilton et al. claim in their article “Investor demand and spot commodity prices” to show that “investor demand can be pushing up a commodity's price even when investor stocks are falling.” In the present comment, it is argued that in both the cases described by Tilton et al., investors are supplying the market, putting physical material into it, rather than adding to demand. Thus, the reasoning by Tilton et al. is not concerned with the phenomenon referred to in the traditional theory, where, in the absence of changes in demand and supply fundamentals, prices rise as a result of increased investor demand for futures contracts.     

Investor demand and spot commodity prices: Reply 2

This, our second reply to Östensson, supplements our earlier more technical analysis with a simple intuitive explanation of how investor demand can be driving commodity prices higher even when investor stocks are falling.     

Investor demand and spot commodity prices

The on-going debate over the influence of investor demand on spot commodity prices largely attempts to assess this influence by measuring the growth in investor demand in recent years. Given the serious data problems that plague such analyses, this article pursues another approach in the hope of providing useful insights into the impact of investor demand on spot commodity prices. It focuses on the mechanisms by which investor demand affects spot prices, and in particular on two questions. First, how does an increase in investor demand on the futures markets affect the spot market and spot price? Second, when investor demand is increasing and pushing a commodity's price up, do physical stocks of the commodity also have to be rising, as economists and others widely assume?On the first question, the article concludes that a surge in investor demand raising prices on the futures markets will have a direct and comparable effect on the spot market prices when these markets are in strong contango. However, when markets are in weak contango or backwardation, price movements in the futures markets have a much looser effect on spot prices. As a result, changes in investor demand on the futures markets may have little or no influence on spot prices in the absence of a strong contango. Instead, changes in fundamentals (that is, producer supply and consumer demand) and possibly changes in investor demand taking place directly on the spot market largely determine the spot price at such times.On the second question, the article shows that investor demand can be pushing up a commodity's price even when investor stocks are falling, despite the widespread presumption to the contrary.     

Animal Abolitionism Revisited: Neo-Colonialism and Morally Unjustified Burdens

Bob Fischer has written a reply to my article ‘Animal Abolitionism and ‘Racism without Racists’’. In this article, Fischer contends that my arguments whereby animal abolitionism engages in acts of racism without racists are mistaken. I wish to reply to Fischer’s objections in this article, through four sets of contentions: (1) Fischer’s arguments reveal some misunderstandings in terms of the concept of racism and, particularly, of ‘racism without racists’; (2) his arguments also underestimate the burdens suffered by individuals who wish to become vegan; (3) Fischer’s views on infantilisation lead to counter-intuitive conclusions; (4) and Fischer’s counter-argument against my neo-colonial critique of abolitionism misunderstands the points made in my previous article.     

On vegetarianism,morality, and science: A counter reply

I recently took issue with Kathryn George's contention that vegetarianism cannot be a moral obligation for most human beings, even assuming that Tom Regan's stringent thesis about the equal inherent value of humans and many sentient nonhumans is correct. I argued that both Regan and George are incorrect in claiming that his view would permit moral agents to kill and eat innocent, non-threatening rights holders. An unequal rights view, by contrast, would permit such actions if a moral agent's health or life is at stake. I then argued that current nutritional research does not support Professor George's claim that some wealthy adult males (and many fewer wealthy women) are the only persons whose health does not require the consumption of nonhuman animals and their products. In her 1992 response to my critique, George did not address my moral argumentation. She concentrated her entire paper on a wholesale rejection of my discussion of nutrition. Although she now takes a somewhat more moderate position on who can safely contemplate strict vegetarianism, she still believes that most people are not in a position to follow such a diet. In my counter-reply, I argue that her rejection is based upon numerous distortions, omissions, and false charges of fallacy. She even devotes a substantial section of her paper to criticizing me for saying the opposite of what I actually wrote. As I did in my earlier paper, I cite current research, including George's own preferred source on the topic of vegetarianism, to support my view. I conclude that Professor George has still not shown that for most human beings it is dangerous to follow a diet that omits nonhuman animals and their products. Moral agents who take the rights of humansand nonhumans seriously will find vegetarianism well worth considering.     

Animal Abolitionism and ‘Racism without Racists’

Abolitionism is an animal rights' philosophy and social movement which has recently begun to grow. It has been largely contested but the criticisms directed at it have usually been articulated outside academia. In this article, I wish to contend that one of the criticisms directed at abolitionism—that it contains racist implications—is correct. I do this by defending the idea that abolitionism engages in what Eduardo Bonilla-Silva classifies as ‘racism without racists’—an unintentional and subtle form of racism. I present three ways in which abolitionism may be considered racist and then address some possible objections to my view.     

Trends in real commodity prices: How real is real?

Testing for the existence of downward trends in real commodity prices has been the focus of several studies since the Prebisch–Singer hypothesis was formulated back in 1950. In this article, we focus on annual and monthly series of various commodity categories and consider alternative price deflators. Based on the methodology of Harvey et al. (2010), which is robust to the order of integration of the time series, we conclude that the time frequency and the price deflators play a key role when testing for the Prebisch–Singer hypothesis. For instance, at an annual frequency (1900–2003, 1900–2008), it becomes considerably more likely to support it when deflating by the unadjusted US CPI-all items than when deflating by the Manufactures Unit Value (MUV) Index or the Historical Price Index of Manufactures (HPIM). This finding is in agreement with the Svedberg and Tilton (2006) discussion on the CPI's overestimation of inflation and the measurement of the real price of copper. When dealing with monthly data (January 1957–December 2010), our results show that real prices tend not to reject the null hypothesis of a trendless series, except when deflating by the PPI-Crude Materials and, to a lesser extent, by the HPIM.     

Naturalness: Beyond Animal Welfare

There is an ongoing debate in animalethics on the meaning and scope of animalwelfare. In certain broader views, leading anatural life through the development of naturalcapabilities is also headed under the conceptof animal welfare. I argue that a concern forthe development of natural capabilities of ananimal such as expressed when living freelyshould be distinguished from the preservationof the naturalness of its behavior andappearance. However, it is not always clearwhere a plea for natural living changes overinto a plea for the preservation of theirnaturalness or wildness. In the first part ofthis article, I examine to what extent theconcerns for natural living meet ``theexperience requirement.' I conclude that someof these concerns go beyond welfare. In thesecond part of the article. I ask whether wehave moral reasons to respect concernsfor the naturalness of an animal's living thattranscend its welfare. I argue that the moralrelevance of such considerations can be graspedwhen we see animals as entities bearingnon-moral intrinsic values. In my view the``natural' appearance and behavior of an animalmay embody intrinsic values. Caring for ananimal's naturalness should then be understoodas caring for such intrinsic values. Intrinsicvalues provide moral reasons for action iffthey are seen as constitutive of the good lifefor humans. I conclude by reinterpreting,within the framework of a perfectionist ethicaltheory, the notion of indirect dutiesregarding animals, which go beyond andsupplement the direct duties towardsanimals.     

Legal aspects of natural resource projects in the CIS

Foreign companies interested in natural resources ventures in republics of the Commonwealth of Independent States must contend with a legal, regulatory and tax environment that is particularly fluid. The approval process for joint ventures, production sharing and export agreements (particularly for natural resources) is complex. Legislation in most CIS countries falls short of adequately addressing investors' concerns or lacks clear guidance on many key issues, such as conditions under which a state enterprise can enter into new business arrangements under current privatization laws. Among other conditions that act as a constraint to investment projects are lack of a sufficiently convertible currency in each CIS country and complex regimes of currency regulation; the absence of financing techniques that are common in market economies (ie secured lending); the need to scrutinize the validity and enforceability of any locally available guarantees and a reluctance by financial institutions to participate in projects in CIS countries (often because they have considerable difficulty assessing the viability of projects). These problems demand an extraordinary commitment in terms of effort and perseverance from potential investors, as compared to projects in other areas of the world. This paper cites the key negotiating issues and transactions that need to be structured with care by a prudent investor.     

Trends in foreign investment : Agreements in the resources industry

Recent agreements between host country governments and foreign investors in the resource industries reflect an effort to meet the objectives of both parties. In some cases majority government ownership is combined with management control and the right of veto on certain policy questions by the foreign investor. Imaginative tax formulas are built into agreements that combine the principle of excess profits taxes with that of a minimum DCF rate of return. Expropriation risk is being limited by employing a high debt-equity ratio. Foreign investors are agreeing to programmes and policies that promote host country economic and social development, while host country governments are quaranteeing foreign investors against changes in laws that would affect their profits.     

Affected Ignorance And Animal Suffering: Why Our Failure To Debate Factory Farming Puts Us At Moral Risk

It is widely recognized that our social and moral environments influence our actions and belief formations. We are never fully immune to the effects of cultural membership. What is not clear, however, is whether these influences excuse average moral agents who fail to scrutinize conventional norms. In this paper, I argue that the lack of extensive public debate about factory farming and, its corollary, extreme animal suffering, is probably due, in part, to affected ignorance. Although a complex phenomenon because of its many manifestations, affected ignorance is morally culpable because it involves a choice not to investigate whether some practice in which one participates in might be immoral. I contend further that James Montmarquet’s set of intellectual virtues can provide a positive account of what it means to act as a responsible moral agent while immersed in a meat eating culture; they also represent the moral and epistemic framework for the kind of public discourse that should be taking place.     

Environment drives financial performance: The Jury is in

In a single day, June 13, 1994, the total stock market capitalization of Exxon dropped by a full 5 percent, with news of the company's exposure to additional legal damages from the Exxon Valdez disaster. Despite what should have been a jarring wake-up call, however, Wall Street investors and company CEOs continue for the most part to conduct business as usual, unpersuaded that environmental considerations are anything more than a superficial and temporary blip on their Bloomberg screens. There is mounting evidence that they're dead wrong. In this article, the authors contend what they're currently sleeping through is nothing less than the beginnings of a profound, worldwide industrial restructuring.     

Taxing mineral resource projects : Papua New Guinea, Indonesia and the Philippines

Within the context of a case study of three Asia/Pacific countries' mineral taxation regimes, this article examines the impact of individual fiscal instrucments, and the total fiscal package, on investor risk perceptions, investor returns and government receipts. It shows that under conditions of uncertainty and risk aversion on the part of investors, significant gains in expected government revenues can be achieved without seriously affecting the investors' ex-ante assessments of projects by a judicious selection and mix of fiscal instruments.     

Long-term trends in the Real real prices of primary commodities: Inflation bias and the Prebisch-Singer hypothesis

Following the Boskin et al., (1996) report, it became widely recognized that price indexes in the U.S. and elsewhere overstate inflation. Svedberg and Tilton (2006) highlighted that this inflation bias may have important implications for estimated long-term trends in nonrenewable resource prices. ST construct an inflation-bias corrected CPI (and PPI) for the U.S. and use their corrected deflator(s) to define a so-called ‘real real’ price of copper. Their ‘real real’ price of copper is then used to re-estimate long-term trends in real copper prices. This paper proposes a quick method for obtaining inflation-bias-corrected estimates of long-run trends in real primary commodity prices directly from estimates in the published literature. Our approach obviates the need re-do existing empirical studies using a corrected or ‘real real’ price of nonrenewable resources. The two approaches are mathematically equivalent.     

NEW DEVELOPMENTS IN THIRD WORLD MINING AGREEMENTS

The long-term trend toward mineral resource development agreements that reflect the desires of developing country governments as well as those of foreign investors is not always clear-cut. At times, conditions in the market for a particular mineral and general financial conditions may affect the balance of bargaining power between governments and investors. Mr Zorn's analysis of two recent copper agreements, in Panama and Papua New Guinea, shows that foreign investors have been able to achieve favorable provisions for the early return of capital and for ensuring investor control over key management decisions. At the same time, the host governments have won provisions that may increase their 'take' from the projects in the longer term.     

Genetically engineered herbicide resistance,part two

Should we continue to support publicly funded research on genetically engineered herbicide resistant crops? In Part One, I discussed the difference between science and ethics, presented a brief history of weed control, and explained three moral principles undergirding my environmentalist perspective. I then argued that unqualified endorsement (E) of the research is unjustified, as is unqualified opposition (O). In Part Two, I argue against qualified endorsement (QE), and for qualified opposition (QO).     

What drives large South African corporations to invest in sub‐Saharan Africa? CEO's perspectives and implications for FDI policies

Foreign direct investment (FDI) flowing into Africa is highly diverse in terms of the origin of the investors, size of the firms, and the sectors of activity. The motivations and factors driving firms' decisions to invest in Africa are equally diverse. A direct survey of senior management in South African firms that are operating in sub-Saharan Africa reveals that the drivers of foreign investment as well as the risks and the strategies to overcome them differ markedly between sectors. A further finding is that there is a limited pool of FDI promotion policies and incentives that governments can institute that are effective in impacting South African corporations' investment decisions. As a consequence, broad-based FDI promotion policies aimed at attracting FDI across all investor groups are likely to have limited impact in attracting FDI from any particular investor group, or in attracting any FDI from multinational companies similar to the South African companies studied here. Such broad based policies probably need to be complemented with policies targeting those specific firms or sectors which countries hope to attract.     

Revisiting the Meaning and Purpose of the “National Park Service Organic Act”

National parks have long endured controversy concerning their fundamental purpose. Is their purpose to conserve natural resources and scenery? Provide for the use and enjoyment of people? Or balance conservation with use and enjoyment? Most people involved in the controversy have taken a view that supports one of the three purposes above. In this article, I contend that the fundamental mandate for parks is conservation of natural resources and scenery but that the mandate is “weak” both as a matter of law as well as because of other factors that weaken it.     

Bioremediation of soils contaminated with explosives

The large-scale industrial production and processing of munitions such as 2,4,6-trinitrotoluene (TNT) over the past 100 years led to the disposal of wastes containing explosives and nitrated organic by-products into the environment. In the US, the Army alone has estimated that over 1.2 million tons of soil have been contaminated with explosives, and the impact of explosives contamination in other countries is of similar magnitude. In recent years, growing concern about the health and ecological threats posed by man-made chemicals have led to studies of the toxicology of explosives, which have identified toxic and mutagenic effects of the common military explosives and their transformation products (Bruns-Nagel et al., 1999a; Fuchs et al., 2001; Homma-Takeda et al., 2002; Honeycutt et al., 1996; Rosenblatt et al., 1991; Spanggord et al., 1982; Tan et al., 1992 and Won et al., 1976). Because the cleanup of areas contaminated by explosives is now mandated because of public health concerns, considerable effort has been invested in finding economical remediation technologies. Biological treatment processes are often considered, since these are usually the least expensive means of destroying organic pollution. This review examines the most important groups of chemicals that must be treated at sites contaminated by explosives processing, the chemical and biological transformations they undergo, and commercial processes developed to exploit these transformations for treatment of contaminated soil. We critically examine about 150 papers on the topic, including approximately 60 published within the past 5 years.